Napoleon concluded one other treaty with Germany on 12th July 1806 according to which the German Empire was divided into three parts: (i) Prussia ruled in North; (ii) Austria reigned in South and East (iii) the Confederation of Rhine was established in West uniting sixteen states of Germany.
Every state out of these 16 was given sovereignty but a Diet was formed for the central administration and Napoleon declared himself the President of this Confederation.
It was also declared that at the time of war each state would provide soldiers to Napoleon in a definite number. This step of Napoleon unknowingly helped the unification of Germany.
He, in order to reduce the power of Austria and Prussia, gave due importance to the small states of Germany and thus wanted to erase the mountain and exalt the valleys.